Setting Up a Credit Card Merchant Account

Setting Up a Credit Card Merchant Account

In order to sell, you need a way to take money. While there are a number of different ways
to take payments in order to have a functional
Merchant Solutions store, you must set up the store to accept credit-card payments. (Yahoo!
won’t allow you to open until you do so.) As this may take a few days to sort out, it would be
nice if you could start the process right away.
One thing you may need to prepare—you’ll need a land-line phone number. If you, like so
many people these days, only have a cell number, you’ll have to set up a land line before you
can apply for a merchant account if you want to use Paymentech, Yahoo!’s recommended
merchant-account provider (it’s one of Paymentech’s policies that you must have a land line).
On the other hand, the second recommended company, 1st American Card Service, does not
require this.
Unfortunately, you cannot complete the merchant account setup until some key items are
present—your store must be “ready for business with clear product and pricing information
available for viewing” so that the company issuing the merchant account can review it. Even
if you don’t have everything complete when you apply, you must at least have a site that looks
complete—one or more products, a contact page, privacy page, and so on. So go ahead and build
your store, and when you’re ready. Or perhaps get the
paperwork in now, but be aware that the process will grind to a halt fairly quickly.
You are backing up data, aren’t you? You need to protect your business information.
What if you lost all your product-catalog data, or lost the program that stores all your
passwords or all your accounting information? Would it hurt? Would it take much time
to recover? If you’re serious about doing business online, you need to find some way
to back up data. And that means off-site! One good strategy is to buy two external USB
hard drives and do a full backup onto both. Store one in your office and back up every
day, and store the other somewhere else, such as a safe-deposit box. Switch them every
week or two.
We’ll see how to enter your products into the store catalog.

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Creating a Store Security Key

Creating a Store Security Key

When you created your Merchant Solutions account, you had to either provide information about
an existing Yahoo! account or create a new account. The Yahoo! account has an ID (to identify
you), and a password (to ensure that only you can access the account). There’s one more form
of account protection that you’re going to need, a security key. The security key is required for
access to many, although not all, areas of your Merchant Solutions account. This allows you to
set up a store account that can be used by, for example, a web designer, but that will give you
sole access to important areas.

Do you have several people who are going to be working on your store? Maybe a couple
of web designers, someone who updates your product list, a staff member responsible for
inventory, and so on? You can create different accounts for each person, providing different
permissions to each. Each staff member must set up a Yahoo! account and check the Add this
profile to the Yahoo! Member Directory box in their Edit Public Profile page. You can then
set up an account in the store using the Access link in the Site Settings column.

The security key is required to view orders—for instance, to set up payment methods or to
change basic account information. It is not required for access to the Store Editor—where you
can create store pages—or to some other less sensitive areas.
It’s a good idea to set up your security key right away, before you allow other people access
to the Store Manager.
1. Click the Pay Methods link in the Store Manager.
2. Yahoo! will ask you for your account password, to verify that you have the right to create
a security key. Type the password and click Continue.
3. Provide a security key, another password. It must contain at least six characters and
cannot match or contain your Yahoo! ID or password, nor include your first or last name.
4. Provide all the other information requested. Yahoo! asks you to confirm some basic
information, including the credit card used to set up the account.
5. Click Submit This Form.

Spend much time online at all, and you’ll end up with a whole lot of account IDs and
passwords. Ideally, these should not be easy to figure out and should vary, so eventually you
have a problem—how do you remember them all? Write them down, and the paper may be
found; don’t write them down, and you’ll eventually forget some of them. A more effective
way to store them is to use a password-management program. One great program is Password
Depot (http://www.password-depot.com/). You can find others at any good download site,
such as WUGNET.com and Tucows.com.

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Pointing www to the Store

Pointing www to the Store

By default, Yahoo! sets up your domain so that it points in two different “directions”:

■ Type www.yourdomain.com into a browser, and the browser goes to your web-hosting
account at Yahoo!.
■ Type store.yourdomain.com into a browser, and the browser goes to your store pages.
What if you’re not planning to use the web-hosting account? If you have decided to use
Merchant Solutions alone and want to point www.yourdomain.com to the store itself, you can
change this setting:

1. In Store Manager, click the Domain link (near the top-right corner) to open the Domain
Control Panel.
2. Click the Manage Domain & Subdomains link.
3. You’ll see the domain listed in a table; click the Edit link.
4. In the following page, select the Change the destination to my Store Editor home
page option button.
5. Click the Submit button at the bottom of the page.
The change won’t be immediate; the switchover may take a few minutes or could take eight
hours or more to complete. Eventually, however, when anyone types www.yourdomain.com into
a browser, they’ll end up at your store’s home page.

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Pointing Your Domain to Your Store

Pointing Your Domain to Your Store

If you already own a domain name—and therefore did not register one for the store during your
Merchant Solutions account setup—you need to point the domain to the store. In other words,
you have to change the domain’s settings so that when someone types the domain into a browser,
the main page from your store will be loaded.
In order to point a domain to a web site, you have to change the DNS settings for the domain.
DNS means Domain Name System; it’s the system used by the Internet to specify where a web
site can be found. When you change DNS settings, you are telling the Internet which web server
has your site so that a browser knows where to go to find it. In order to point your domain to
your Merchant Solutions store, you have to change the nameserver information associated with
your domain to use the Yahoo! nameserver information.
This sounds a little complicated, but don’t worry too much about the technical aspects.
Yahoo! should send you an e-mail providing the nameserver information if you told Yahoo! that
you intended to use an existing domain. (If you can’t find this information, call and talk to their
customer support people.)
Provide this information to whoever manages your domain name. If that’s you, go to the
registrar’s web site and look for a page where you’ll see “Set Nameservers” or something
similar, and follow instructions there.

You can only point a single domain to a Yahoo! Merchant Solutions store. However, you
can forward as many domains to the store as you wish. With forwarding, you don’t change
nameserver information; you simply tell the registrar to forward browsers to another
domain name.

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Doing a Keyword Analysis

Doing a Keyword Analysis

If keywords are important, how do you know which keywords to use?
1. Guess.
2. Take your guesses and run them through a keyword-analysis tool.
Do not stop at Step 1! If you guess, you’ll guess wrong!

Wordtracker is almost certainly the best keyword-analysis tool around (www.Wordtracker
.com). It’s the system used by most search-engine professionals because you can do more with
it, more quickly. We don’t have room to describe this tool, but it’s worth spending a few hours
and doing a really good analysis with this tool.

We’ll look at a free way for carrying out a keyword analysis, though ideally you should
use Wordtracker, which you can “rent” for around $8 a day (one day’s usually plenty). The
following’s a simple procedure that uses your brain power and Yahoo!’s Keyword Selector Tool.
1. Quickly write down all the obvious keywords, the ones you’ve already thought about. If
you’re selling golf equipment, an obvious choice might be golf equipment . . . and golf
clubs, golf balls, golf cart, and so on.
2. Now think from your customers’ point of view. Put yourself in their shoes . . . can you
think of terms they might use?
3. Ask employees, partners, family . . . what other terms can you come up with?
4. Go back over your list, and add plural versions of singular terms and singular versions of
plural terms.
5. Look for words that are likely to be frequently misspelled, and add them, too. (Some
words are misspelled as much as one third of the time they’re used, so these represent
a significant opportunity for reaching people.)
6. Go to the Yahoo! Search Marketing Solutions web site (http://searchmarketing.yahoo
.com/) and find the Keyword Selector Tool. (Unfortunately, Yahoo! keeps moving things
around; sometimes it’s easy to find, other times it’s hidden away. Dig around and you
should eventually find it; look for the Advertiser Center or something similar.)
7. Type a keyword into the text box and press ENTER.

Google also provides a free keyword-analysis tool, though it’s also hidden away a little. Go
to adwords.google.com and begin setting up a Google AdWords campaign—quickly enter a
little fake data so you can move through the steps and you’ll find a Keyword Tool link in the
Choose Keywords step.

8. The tool returns a list of similar keywords and the number of times the keyword has been
used in a prior month on the Yahoo! PPC network (see Figure 22-3).
9. Look down the list for terms to add to your own list. Enter another term, including terms
you find in this list, into the text box at the top and try again.
This tool will give you ideas for keywords, and some notion of how often searchers use a
particular term. It won’t tell you how much the term will cost, though.

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Understanding Keywords

Understanding Keywords

A keyword or keyword phrase is a word or series of words typed into a search engine by someone
seeking something. Keywords are used to trigger the display of your PPC ads. You’ll “bid” on
keywords—for instance, you might bid, say, 55 cents for the term camping equipment. When
someone types camping equipment into their browser, the PPC system looks at all the bids for
that keyword phrase, and places the ads on the results page accordingly—most systems place the
highest bid at the top of the list, as in Figure 22-2, although Google uses other characteristics.
More importantly, ads that people click more frequently get a rank “boost” in the system.

As you can see, keywords are essential. In fact, you have to pick the right keywords, because
■ The right keywords bring the right people to your site; you don’t want to pay for people
who won’t buy!
■ Some keywords are more expensive than others. Some keywords might be several
dollars, while similar ones might be ten cents.
Here’s an example, taken from Yahoo! Search Marketing Solutions (www.overture.com), for
top bids at the time of writing:

vioxx $11
vioxx attorney $38.06
vioxx attorney denver 10 cents
Keywords are critical! Before you can begin a PPC campaign, you must understand the
keywords.

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So, Can You Make Money?

So, Can You Make Money?

Many readers, after thinking about the last few pages, are probably now in shock, especially if they’ve run a few numbers through their heads. They remember that
■ A click costs at least 5 or 10 cents through the major PPC systems, and often much more.
■ Conversion rates are often 1:100 or 1:200.
How on earth can I possibly make money with PPC? The simple answer is, in many cases,
you can’t. Here’s an example. Let’s say your product will give you a gross profit of $10, before
paying for the PPC costs. Not an unusual sum—many products are in this ballpark, such as
books, music, small gifts, and so on. Let’s give you a fighting chance, and assume you’ll have
a conversion ratio of 1:50. And we’ll assume that you can buy clicks for 10 cents:
■ 50 clicks are needed for one sale.
■ 50 clicks cost $5 (50 × 10 cents).
■ Thus one sale costs $5, so your ROI is $1 for every $1 spent on advertising ($10 preadvertising
profit = $5 profit after advertising; $5/$5 = $1).
You’re making money, but unless you sell a lot of whatever this is, you’re not getting rich.
So let’s see what happens when you change just one thing in the calculation. Let’s try separately
altering the conversion ratio, the click cost, and the gross profit per sale and see how each affects
the equation.
■ Your conversion ratio is 1:100—you just broke even.
■ Your conversion ratio is 1:200—you just lost $10.
■ Your click cost is actually 30 cents a click—you just lost $5.
■ Your click cost is actually 50 cents a click—you just lost $15.
■ Your gross profit is actually $6—you just made $1.
The fact is, PPC doesn’t work for everyone! In particular, you’ll have trouble making PPC
work if:
■ Your products have low gross profits.
■ Your web site has a low conversion ratio.
■ Click costs are very high for the keywords you want to use.
Remember:
■ High Gross Profits + High Conversion Ratios + Low Click Costs = Good!
■ Low Gross Profits + Low Conversions Ratios + High Click Costs = Bad!
Any one of these elements can cause a problem. If all three are bad, you’re in real trouble!

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Calculating Click Value and ROI Later

Calculating Click Value and ROI Later

If you’re already in business and selling through your online store, you should have a closer
estimate of your conversion ratio. From there, you should be able to figure out the real
conversion ratio. It won’t necessarily be the same as the conversion ratio you’ll get from your PPC campaign; for many reasons the PPC conversion ratio could be higher or lower. But at least
you’ll have a real number to work with, rather than a pure guess.
How do you figure out your conversion ratio? Look at your web site statistics and find out
how many people visited your store over a particular period. For instance, choose your last
month of operations, and look for a statistic such as:
■ Unique Visits
■ Unique Visitors
■ Customers (an ambiguous term, but unfortunately the one used by Yahoo! Merchant
Solutions)

If you’re using Yahoo! Merchant Solutions, click the Reports link in the Statistics column and
look for the Customers statistic.

Once you know how many people have visited your store during that period, you need to
find out two more things:
■ The number of orders taken through the store
■ The average gross profit on each order
Now you can calculate your conversion ratio. To do so, divide the Number of Visitors by
the Number of Orders. For instance, if you had 1,538 visitors one month, and you processed 12
orders, your conversion ratio is 1:128. That is, you need 128 visitors in order to make one sale.
The average gross profit number, of course, allows you to figure out your breakeven click
value. For instance, let’s say:
■ The average gross profit on the orders is $35.
■ For every order you needed 128 visitors.
■ Thus, your breakeven click value is 27.34 cents. If you pay more than this for every
click, you’ll lose money.
This is still just an estimate, of course, because until you run a PPC campaign, you don’t
know if the conversion will be worse, the same, or better.
Once you actually run the PPC campaign, you can get exact numbers. You won’t care
so much about breakeven click value anymore because you’ll be able to see your ROI and
determine whether you’re making money. You’ll know just how much you’re spending for each
click, and you’ll also know your conversion ratio, under two conditions:
■ If you’re sure you’re getting all your site visits from PPC campaigns, then you know all
your sales are derived from PPC advertising and you can accurately calculate your ROI.
If you get traffic from various sources, though, you can’t do this, unless . . .
■ You install software that tracks sales from your PPC campaigns.

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Calculating Breakeven Click Value- What’s the ROI?

Calculating Breakeven Click Value- What’s the ROI?

Calculating Breakeven Click Value
So, here’s how to calculate breakeven click value. Let’s use some sample data:
■ Click conversion rate: out of every 200 people clicking a PPC ad and arriving at your
site, one will buy.
■ Average profit per sale, before advertising costs: every sale brings $150 in gross profit.
The calculation is very simple. Divide the average profit by 200 (in order to make one sale,
you must get 200 clicks): $150/200 = 75 cents.
What does this mean? If you spend 75 cents for every click—that is, 75 cents each time you
use a PPC ad to bring a visitor to your site—and you sell to one person in 200, you’ll break even.
You won’t make money on the sales, but you won’t lose money on the products sold, either.

What’s the ROI?
What’s the ROI on an advertising campaign in which you pay the maximum click value? Nothing.
You have no return. The profit you make on the sales goes to paying the investment in the advertising.
Here’s how to calculate ROI:
Gross profit derived from the advertising divided by the sum spent on advertising
In the previous example, the advertising cost was $150 (200 clicks at 75 cents), and the
profit, after subtracting the cost of the advertising, was $150.
$150/$150 = $0
Consider another scenario. This time you spend 40 cents per click; you still need 200 people
to come to the site for each sale (so you spend $80 on clicks), and the gross profit, before click
costs, is $150.
$150 − $80 = $70
$70/$80 = $0.875
In other words, for every dollar you spend, your ROI is $0.875.

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